My computer and I have been through a bad spell these past couple of weeks.

First, my router/modem developed a terminal malfunction, and then my new anti-virus software failed to install. Thankfully, three very capable and patient gentlemen at various technical support facilities found solutions.

These three gentlemen were, respectively, from India, the Philippines, and once again, India.

If you or someone in your family is about to graduate with a degree in computer science, don’t expect to find a job in the U.S. any time soon.

Amidst my computer worries, I bought a dozen or so electrical supplies from the local hardware: a surge protector, extension cords, a phone, that sort of thing. Glancing at the labels, I found that each and every one was made in China. And a new hard drive? From Malaysia.

No need to go on with this, you know about it already. It’s called “outsourcing.”

Were it as simple as that, it would be a waste of
my effort writing about it, and of your time reading yet another
complaint about that which is painfully familiar.

But outsourcing, and the consequent loss of millions of American
manufacturing and service jobs, is not the plain and simple result of
corporate greed. It is, instead, an inevitable result of a combination
of factors, including:

the successful enactment of the right-wing dogmas of “the
invisible hand” and “trickle down,” namely the conviction that
individual entrepreneurs and corporations will, by seeking only their
own economic gain, obtain the best results for society at large. These
are "dogmas" because they are "proven," not by historical evidence or
practical experience, but rather through repetition.

the corollary libertarian dogma that government has no justification
whatever in interfering with the economic activities of private
individuals and corporations. In the words of Milton Friedman, “There
is nothing wrong with the United States that a dose of smaller and less
intrusive government would not cure.”

fiduciary responsibility: the legal requirement that the primary responsibility of the corporation is to its stockholders, not the public.

Thus the necessity of outsourcing is beyond the control of any single
corporation’s executives or board of directors. It is a thus a tragedy,
in the sense defined by the philosopher Alfred North Whitehead: a
consequence of “the remorseless working of things.” (See Garrett
Hardin’s “The Tragedy of the Commons.”).
As long as these conditions obtain, jobs will gravitate toward the
individuals accepting the lowest wages, i.e., those abroad, and the
middle class will wither as wealth flows from those who create the
nation’s wealth to those who own and control the wealth. These are
conditions that are destined to ruin the economy of the United States.

“As long as these conditions obtain...” The obvious solution, then, is to change “these conditions.”

The Problem of Fiduciary Responsibility

So why don’t corporate executives simply behave like good Americans, and keep those jobs stateside?

Because, quite frankly, if they were to do so, they would be taken to
court by the stockholders and sued. And they would lose.

Near the close of the Nineteenth Century, railroad tycoon William
Vanderbilt famously said, “The public be damned, I work for my
stockholders.” And in 1970, The New York Times Magazine published an
article by Milton Friedman, “The Social Responsibility of Business is
to Increase its Profits.” The title says it all.

The knee-jerk liberal response is that these quotations are expressions
of plain lousy attitudes. Sadly, it's much worse than that.

It’s the law!

The fiduciary responsibility of corporations, first and foremost to
their stockholders, has been articulated in numerous court decisions,
and in the statutes of several states. And so, as Daniel Brook writes in Huffington Post

“Corporations have a fiduciary responsibility to maximize
profits even if it means betraying the nation, trashing the
environment, or fomenting unconscionable levels of inequality. Nothing
is unconscionable for a corporation because they don't have
consciences; they're not really people, whatever the courts may say.”

Accordingly, my internet service provider and the company that makes my
anti-virus software simply had no choice: they had to hire tech support
workers in India and the Philippines and to fire their American
technicians. Had they not done so, they would have been put at an
insurmountable competitive disadvantage with their rivals who have no
qualms about outsourcing. The profits and stock value of the “socially
responsible” corporations would drop, causing losses to their
stockholders – i.e., those to whom they owed “fiduciary responsibility.”

And then the company would find itself in court, facing a winning suit by the stockholders.

Obviously, corporate activity affects more than managers, employees and
stockholders. Corporations also involve customers who are entitled to
be protected from fraud and from defective products. Civil courts exist
to reimburse customers for damages from corporate abuses, and few if
any libertarians would object, in principle, to the exercise and
enforcement of civil law. Because civil suits can be costly and impact
upon the corporate bottom line, corporations have a fiduciary
responsibility not to engage in fraud or to sell defective products.
(Unfortunately, as the recent Supreme Court decision on the Exxon
Valdez suit reminds us, corporate-friendly courts can reduce civil
settlements to trivial sums that fail to deter corporate malfeasance).

In addition to injured customers, there are unconsenting third parties,
“stakeholders,” who are affected by corporate activities. These include
persons residing downwind and downstream from industrial polluters,
teen-agers “hooked” on cigarettes leading to a shortened life of
addiction, taxpayers who pay for the public health costs of smoking,
ecosystems damaged by pesticides, citizens whose government is
corrupted by corporate lobbying and campaign contributions, and
humanity at large the future of which is imperiled by global climate
change.

Add to this, American workers who lose their jobs to outsourcing;
victims of “collateral damage” resulting from the fiduciary
responsibility of corporations to reduce labor costs and thus to
increase profits and the return on the investments of the stockholders.

Who Speaks for the “Stakeholders”?

Who else, but the government?

Many, and perhaps most, corporate executives, when confronted by the
economic and social devastation brought on by outsourcing, might reply:
“Yes, it’s horrible! But what can I do about it? If I insist on hiring
American workers at American wages, my firm will go broke or, before
that happens, the Board of Directors will fire me. I’m helpless!”

Sad to say, they are right.

Alternatively, one might bring together the CEOs of all the
competitors, and try to persuade them to agree not to outsource.
Problem is, that might be collusion, which is illegal. Or if not, there
would be no sanctions against violating the agreement, and enormous
advantages would be gained by any renegade firm that did so. It's a
paradigm case of the prisoner's dilemma: that which is good for all is bad for each. Without the enforcement of sanctions there is an irresistible temptation to defect from the agreement.

In any case, missing from that assembly would be delegates representing
those unconsenting but seriously affected third parties, the
“stakeholders.” Their claims against the corporations would exact costs
that would adversely affect “the bottom line:” profits and returns on
investments. And the corporations, by law, have that fiduciary
responsibility to maximize the bottom line.

Leave it to the unregulated free market, the profit motive, and
fiduciary responsibility, and the stakeholders, which is to say the
general public, is screwed. Given these conditions, there is no escape
from this “remorseless working of things.” It is a tragedy.

So the solution is compelling: abolish the conditions that bring about the tragedy.

The stakeholders must be given a place at the table that determines corporate policy.

And there is one and only one institution qualified to represent the
stakeholding general public. That would be a representative government,
such as that established by the founders of our republic.

“To secure these rights, governments are established among
men, deriving their just powers from the consent of the governed.”

"We the people of the United States, in Order to form a more perfect
Union, establish Justice, insure domestic Tranquility, provide for the
common defence, promote the general Welfare, and secure the Blessings
of Liberty to ourselves and our Posterity, do ordain and establish this
Constitution for the United States of America."

How strange and sad it is that we have allowed the right-wing dogmas of
market absolutism, libertarianism, “the invisible hand” and “trickle
down” to cause us to forget the founding principles of our republic,
and to forget the lessons learned from a difficult history since that
founding.

We’ve tried laissez faire
capitalism, and each time it has failed all but a very few wealthy and
privileged individuals, and eventually those too when the economy
collapses.

We learned from the crash of 1929 and the
depression that followed, that corporate greed, unconstrained and
unregulated, can lead to a ruined economy. Then we recovered, not by
abolishing capitalism, but by reforming it and regulating it with
agencies of government acting in behalf of "we the people," i.e. the
stakeholders.

Through tax incentives, tariffs, and other laws and regulations, the
government can end and reverse the outflow of jobs from the United
States. Goodness knows there's abundant work to be done within our
borders. The physical infrastructure of the U.S. is in an advanced
state of decay, and only government appropriations can repair it, with
jobs that by their nature can not be outsourced. Like it or not, the
petroleum age is on its way out, opening the necessity for the
development and implementation of alternative and sustainable energy
sources. Here is a compelling opportunity to re-establish our
dismantled manufacturing base. And be assured that if we don’t take the
lead in ushering in the solar age, some other country will do it and we
will be left behind.

The lessons of history notwithstanding, we have tried market absolutism
and minimal government once again, and they are failing once again. The
United States of America is near bankruptcy, our currency is in
decline, we are massively in debt to our rivals, our manufacturing base
has been dismantled, and we are despised the world over.

Comments regarding proper use of outsourcing
The topic of outsourcing is a big deal right now, all over the world. Many people in my opinion, misunderstand it. For the small business owner or solopreneur, outsourcing and connecting to service vendors in other countries, outside one's own is a great money saving benefit.